Free VoIP

There is a great regime on US bill would free VoIP from regulation e.g. US Senator John Sununu (Rep. NH) introduced legislation during the first week of April 2004, which would exempt VoIP from state laws and most regulation covering traditional voice calls. The bill defines VoIP as an information service which should be regulated like other Internet services. The bill will also exempt VoIP providers from wiretapping.

The VoIP Regulatory Freedom Act restricts the ability of individual states to tax internet phone calls and restricts what regulation the Federal Communications Commission’s freedom to regulate the new services. The FCC began looking at VoIP regulation in February. The proposed legislation gives the FCC 180 days to propose alternative access fees and a way to deal with universal service fees - the way telcos subsidize phone access in rural and remote areas. Charles Pickering Jr, a Mississippi Republican, is introducing a similar bill into the House of Representatives. AT&T welcomed both draft laws, describing them as: “a strong vision for the future”.

The two lawmakers said they would introduce legislation in the next few days mandating Voice Over Internet Protocol (VoIP) applications be subject to only minimum federal oversight and this lead to Free VoIP usage. The bills prevent the Federal Communications Commission (FCC), which is currently conducting its own year-long investigation into IP-enabled services, from delegating VoIP regulatory authority to state and local officials. The legislation also exempts VoIP applications from the FCC’s access charge regime.

Currently, the FCC requires access fees be paid to incumbent carriers for use of their systems. Internet service providers are exempt from the access fees, having been classified by the FCC as an information service, which is not subject to traditional telecommunications carrier rules, fees and tariffs. Sununu and Pickering hope to extend the same information service exemption to VoIP applications.

Congress must establish federal authority in this area, provide direction for any action by the FCC and preclude individual states and jurisdictions from regulating VoIP. Unfortunately, some interests would like to impose an outdated and stifling regulatory framework on this service, rather than allow Free VoIP to continue to expand freely.

The legislation does carry some federal obligations for VoIP providers, requiring the FCC impose universal service fees on VoIP customers but excludes VoIP applications that do not interconnect with the public switched telephone network (PSTN).

Most VoIP providers route calls from leased PSTN local telephone lines to a gateway server that converts analog voice into data packets. From there, the data packets move over the public Internet or a private backbone to its destination, where it goes through another gateway, rolling over to a PSTN local line.

While VoIP is clearly a phone service, it is shipped as data packets, which is why providers argue these types of calls shouldn’t be regulated in the same manner as PSTN telephone carriers.

“The laws that are on the books right now really don’t deal in a clear way with VoIP technology,” Sununu said. “What we have done is try to craft an approach that gives a clear framework for federal oversight of VoIP. It pre-empts heavy-handed state regulation and it even limits the FCC’s role at this particular time.”

As the major telecoms and cable companies join startup Free VoIP ventures in moving voice-converted data traffic over the Internet, the taxation issue becomes critical for cash-starved states that raise hundreds of millions of dollars in telecom fees and taxes based on the FCC’s traditional regulatory model for telecoms.

Most of those rules were written decades ago to reflect the government’s interest on behalf of the public in the monopoly granted to the Bell systems. The legislation also requires the FCC to select a “proper industry consensus” to develop guidelines, protocols or performance requirements to facilitate 911 and e911 services. In addition, Sununu and Pickering expect VoIP providers to make their systems accessible for legally authorized wiretaps.

Since announcing in December that it would launch an inquiry into the possible need of regulations for the quickly emerging Free VoIP sector, the FCC has repeatedly said it plans to use a “light regulatory approach.”

In March, the FCC published a Notice of Proposed Rule Making, a 56-page document that asks broad questions covering a number of areas. They include proper classification of IP-enabled services, jurisdictional issues between the federal government and states, and the appropriate legal and regulatory framework for the new services.

Preliminarily, the FCC says Internet telephony services that do not use the PSTN are information services and exempt from access fees, but may be subject to public safety, law enforcement and other regulations.

ExtremeTech compared the two newest ways to call friends via the Internet: The SIPphone from Lindows vs. the Skype service from the developers of Kazaa.